What’s up with… Telefónica, Vodafone, the chip supply chain

  • Spain starts small with Telefónica stakebuilding 
  • Vodafone Germany to cut 2,000 jobs
  • GenAI to fuel chip supply chain expansion in 2024

In today’s industry news roundup: STC-wary Spain snaps up a small slice of Telefónica; Vodafone Germany preps major headcount reduction; generative AI (GenAI) action is set to bolster the global chip supply chain; and more!

In a direct response to STC’s acquisition last September of a 9.9% stake in Telefónica, the Spanish government has splashed out €698m on a 3% stake in the country’s national operator. The stakebuilding was carried out by state investor Sociedad Estatal de Participaciones Industriales (SEPI) and is likely to be followed throughout this year with the purchase of additional shares: The government announced in December last year its intention to acquire a 10% stake in the telco, a holding that would make it the largest single shareholder. According to SEPI, its initial entry as a long-term shareholder in Telefónica will deliver better shareholder stability and will safeguard the capabilities of the company that is deemed strategic for Spain’s national interests. STC, whose investment in Telefónica comprises a 4.9% direct equity stake and a 5% indirect stake via convertible financial instruments, has also been linked with a potential move to acquire Spanish rural connectivity provider Avatel Telecom and is also still in the running to boost its presence in the Iberian peninsula by snapping up Altice Portugal, though the bidding war for that asset is far from over.   

Vodafone Germany has announced plans to save around €400m over the next two years in a move that will affect some 2,000 jobs. In a translated statement, the operator has said that “personnel costs will be reduced through savings and [the] relocation of around 2,000 jobs – also because manual tasks will be carried out through increased automation in the future”. The company explained that this move is part of the telco group’s wider efforts to revamp its operations and make the company “leaner and therefore more powerful”. This plan was unveiled by CEO Margherita Della Valle in May 2023 and will see 11,000 jobs (more than 10% of Vodafone’s workforce) being cut over a period of three years – see Vodafone CEO axes 11,000 jobs, says performance is “not good enough”. Additionally, Vodafone Germany has stated that costs will be primarily reduced by dismantling complex structures, and modernising network elements and IT systems. It will also strive to increase investments in “strong networks, simple products, improved customer accessibility, advertising” and growth areas, such as the internet of things (IoT) and cloud. Earlier this month, Vodafone unveiled a major reorganisation that will see its CEO in Germany, Philippe Rogge, stepping down by the end of March. The German operation will be headed up by Ahmed Essam, currently the CEO at Vodafone UK, who will become executive chairman of Vodafone Germany and CEO of a new division, called European Markets – see Vodafone ‘reshapes’ its Euro footprint with Italian sale.

Demand stemming from generative AI (GenAI) developments is set to help the global semiconductor supply chain grow in 2024. This is according to a new study from Omdia, which expects the value of the global chip supply chain to reach around $600bn in 2024, driven by both heightened demand for AI chips and strategic inventory adjustments in recent quarters. “Nvidia currently dominates the AI accelerator market, particularly for cloud and datacentre deployments. Concurrently, major hyperscale cloud service providers like Google, Amazon and Microsoft are developing their own AI application-specific integrated circuits (ASICs) to enhance cost efficiency and performance tailored to their unique AI workloads”, explained Claire Wen, senior analyst at Omdia. A “notable rise” in edge AI adoption, especially in AI PCs and smartphones, is also contributing to the growth expected by the research house.

Meanwhile, Omdia has issued a report on the state of the semiconductor market over the past year, estimating that global revenue has dropped 9% year on year – from $597.7bn in 2022 to $544.8bn in 2023. This follows two years of “record growth” due to surging demand and market shortages during the Covid-19 pandemic. “Demand has softened due to macroeconomic factors, while semiconductor component supply has increased,” explained Cliff Leimbach, senior research analyst at Omdia. However, 2023 was also the year AI emerged as “a significant growth driver” in the industry, with companies such as Nvidia reaping the benefits. “Nvidia’s rapid growth in semiconductor revenue has placed [it] as the second-largest semiconductor company by revenue in 2023, trailing Intel. Samsung, the industry leader in 2022, slipped to third place in 2023, as memory revenue declined by nearly half from the 2021 level,” noted Leimbach. Find out more.

UK telecom watchdog Ofcom has begun its review of the regulations that will apply to the UK wholesale telecom sector from April 2026 until March 2031.The review will help make sure the UK’s broadband infrastructure is fit for the future. It will aim to set the right environment to promote competition and investment in gigabit-capable broadband, to deliver better services and more choice to consumers,” noted Ofcom. The review will be of particular interest to BT’s quasi-autonomous wholesale access division Openreach, wholesale FTTP altnet Cityfibre, Virgin Media O2 (VMO2), which recently formed a new wholesale broadband unit, and VMO2 affiliate Nexfibre. According to the regulator, broadband connections capable of 1 Gbit/s downlinks are now available to more than 23.2 million homes (78% of the UK), while more than 17.1 million homes (57% of the total) can access fibre access lines. Read more

As the telco industry is striving to reduce its carbon footprint, Deutsche Telekom (DT) has provided an update on its progress towards meeting its sustainability goals. The German operator has claimed that in 2023, it reduced its group-wide carbon dioxide emissions by 11% compared to 2022 levels, saving 1.3 million metric tonnes throughout its entire value chain and across all scopes. This means DT has achieved 23% of its goal to reach climate neutrality by 2040. Furthermore, the telco has also lowered its energy consumption by 7.6% since 2022, with “ongoing green investments in more efficient network technologies and by replacements of legacy equipment”. The company has also been testing solar energy systems, expanding the use of photovoltaics at its mobile sites, and trialling zero-emission fuel cells that “can provide a climate-neutral power supply”. Read more.

- The staff, TelecomTV

Email Newsletters

Sign up to receive TelecomTV's top news and videos, plus exclusive subscriber-only content direct to your inbox.